Single family residence near Fort Hood, TX

[Nikki Martinez]

Investment Info:

Single-family residence buy & hold investment in Copperas Cove.

Purchase price: $132,000
Cash invested: $132,000

This was our primary residence while stationed at Ft. Hood and is now a rental property.

What made you interested in investing in this type of deal?

We were looking for a home to live in and then rent out after we moved. We found this home as a short sale and were able to buy a better home than our budget would have otherwise allowed.

How did you find this deal and how did you negotiate it?

We were driving by the home while viewing other properties and between the morning and the afternoon a sign appeared in the yard. We had our agent call and check to see what they wanted and found out that it was being short sold. We presented an offer the next day that was below what was being asked, and the bank agreed. It took about 3 months for the process to be completed.

How did you finance this deal?

Financed through the VA as we were living in the home as owner occupants. As soon as we moved in we had about $30K in equity as the home was worth more than it was being sold for.

How did you add value to the deal?

Cosmetic updates, fixed terrible paint decisions that tenants had made. Replaced all of the living room and master bedroom carpet with vinyl wood flooring. Had to replace the roof and grade and landscape the backyard.

What was the outcome?

Still producing very consistent rent. However the property taxes in that area eat up 1/3 of the yearly rent. I don't recommend this market for landlords due to high taxes. TX also will not allow a HELOC on a home that you do not reside in, no matter how much equity you have in it.

Lessons learned? Challenges?

As this was our first attempt to buy a property that we intend to rent out, we learned how critical it is to understand the property tax implications. Both as a resident and a landlord. The homesteading exceptions made the taxes very affordable while we lived there and completely bonkers now that we do not. This also had a huge impact on the monthly mortgage payment, verses other states with lower property taxes.